Richard Heinberg: The End of Growth and the Journey to a New Economy

Richard Heinberg[1], Senior Fellow at the Post Carbon Institute, wants us to brace ourselves for some pretty serious shocks. The financial collapse of 2008 and the Great Recession that followed was just a signal that our unsustainable growth economy has stopped climbing, plateaued, and in all likelihood will continue to stagnate or trend downward until we reach some kind of economic and ecological equilibrium.

Four Propositions

The following summary statements are fundamental both to grasping our current situation and managing our way toward a desirable future:

We have reached the end of economic growth as we have known it. The “growth” we are talking about consists of the expansion of the overall size of the economy (with more people being served and more money changing hands) and of the quantities of energy and material goods flowing through it. The economic crisis that began in 2008 was both foreseeable and inevitable, and that it marks a permanent, fundamental break from past decades—a period in which economists adopted the unrealistic view that perpetual economic growth is necessary and also possible to achieve. As we will see, there are fundamental constraints to ongoing economic expansion, and the world is beginning to encounter those constraints. This is not to say the U.S. or the world will never see another quarter or year of growth relative to the previous year. Rather, the point is that when the bumps are averaged out, the general trend-line of the economy (measured in terms of production and consumption of real goods) will be level or downward rather than upward from now on.

The basic factors that will inevitably shape whatever replaces the growth economy are knowable. To survive and thrive for long, societies have to operate within the planet’s budget of sustainably extractable resources. This means that even if we don’t know exactly what a desirable post-growth economy and lifestyle will look like, we know enough to begin working toward them.

It is possible for economies to persist for centuries or millennia with no or minimal growth. That is how most economies operated until recent times. If billions of people through countless generations lived without economic growth, we can do so as well—now and far into the future. The end of growth does not mean the end of the world.

Life in a non-growing economy can be fulfilling, interesting, and secure. The absence of growth does not imply a lack of change or improvement. Within a non-growing or equilibrium economy there can still be a continuous development of practical skills, artistic expression, and technology. In fact, some historians and social scientists argue that life in an equilibrium economy can be superior to life in a fast-growing economy: while growth creates opportunities for some, it also typically intensifies competition—there are big winners and big losers, and (as in most boom towns) the quality of relations within the community can suffer as a result. Within a non-growing economy it is possible to maximize benefits and reduce factors leading to decay, but doing so will require pursuing appropriate goals: instead of more, we must strive for better; rather than promoting increased economic activity for its own sake, we must emphasize whatever increases quality of life without stoking consumption. One way to do this is to reinvent and redefine growth itself.

The transition to a no-growth economy (or one in which growth is defined in a fundamentally different way) is inevitable, but it will go much better if we plan for it rather than simply watching in dismay as institutions we have come to rely upon fail, and then try to improvise a survival strategy in their absence.

In effect, we have to create a desirable “new normal” that fits the constraints imposed by depleting natural resources. Maintaining the “old normal” is not an option; if we do not find new goals for ourselves and plan our transition from a growth-based economy to a healthy equilibrium economy, we will by default create a much less desirable “new normal” whose emergence we are already beginning to see in the forms of persistent high unemployment, a widening gap between rich and poor, and ever more frequent and worsening financial and environmental crises—all of which translate to profound distress for individuals, families, and communities.